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Organic market report 2013 Published with the support of Soil Association South Plaza | Marlborough Street | Bristol BS1 3NX T 0117 314 5000 | F 0117 314 5001 www.soilassociation.org Registered charity no. 206862 Soil Association Scotland Tower Mains | 18c Liberton Brae | Edinburgh EH16 6AE T 0131 666 2474 | F 0131 666 1684 www.soilassociationscotland.org Registered charity no. SC039168 ©Soil Association 2013 2 SOIL ASSOCIATION Foreword In a prolonged economic downturn it is hardly SUPPLY SHORTAGES THREATEN GROWTH surprising to find subdued sales of a wide variety Some supermarkets have turned their predictions of goods and services. The UK organic sector is not of falling demand into a self-fulfilling prophecy by immune to the challenges of the wider financial dramatically cutting organic ranges and shelf space, environment. reducing availability for shoppers who want to carry on buying. This has triggered disproportionate cuts Despite a 1.5% decrease in sales overall, however, in production of some commodities, such as eggs, there are areas of significant growth for organic causing supply shortages. It is important for all products. These include parts of the dairy sector, retailers to work more closely than ever with their large specialist retailers, home delivery, non-food organic suppliers to ensure the higher farmgate products and catering. This report also identifies prices, better planning and decent forward contracts a number of important trends, opportunities and that are needed to restore producer confidence challenges for the UK organic market: and safeguard future supply. ONLINE AND INDEPENDENT SUCCESS OUR GOVERNMENT IS OUT OF STEP Organic shoppers are increasingly choosing the European sales of organic products have increased convenience and variety offered by online shopping by more than 25% since the start of the global and specialist stores over the inconvenience and economic downturn in 2008. Our government frustration of finding more limited ranges and stock has much to learn from its European counterparts, at many supermarkets. Multiple retailers will need who back the organic sector strongly through a to ensure full ranging of organic products and invest combination of environmentally based producer in their own-label ranges (whose sales fell by 11.2% support, firm targets for public-sector procurement in 2012) if they are to regain ground from the leading of organic, and investment in promoting organic home-delivery specialists Ocado, Abel & Cole and products. Riverford (whose organic sales increased by 10.3%). Despite the relative neglect of our policy makers YOUNG SHOPPERS ARE LEADING THE WAY and some supermarkets, there is much cause for The ‘Jamie Generation’ of ethically aware consumers optimism in the success of specialist retailers, the under 35 significantly increased their average enthusiasm of young shoppers and the long-overdue spending on organic products in 2012, pointing questions being asked about our reliance on cheap, to a healthy future for the organic market. low-quality, untraceable food in the wake of the horsemeat crisis. It may be difficult to anticipate THE CATERING MARKET IS OPENING UP precisely when the UK organic market will return to Organic catering and restaurant sales rose by growth, but we can predict increasingly confidently 1.6% in 2012, despite a general tendency to eat that it will do so. out less in tough economic times. The Food for Life Catering Mark is proving a key factor in opening up opportunities for organic producers: the number Rob Sexton of meals served under the scheme increased by Chief Executive, 40% in 2012 to 140 million. Soil Association Certification Ltd O R G A N I C M A R K E T REPOR T 2 0 13 3 Overview THE UK AT A GLANCE Land Sales Businesses 656,000ha £1.64 billion 6,929 -8.7% -1.5% -4.9% €45.8 billion global sales ONLINE SALES €21.5 billion European sales £4.1m £1.64 billion A WEEK 2005 2008 2012 OCADO SALES UP 6.4% 4TH LARGEST ORGANIC RETAILER TOP GLOBAL MARKETS WITH 1,400 ORGANIC LINES USA GERMANY FRANCE €21 billion €6.6 billion €3.7 billion 4 SOIL ASSOCIATION TEXTILE SALES UP 10% HEALTH & BEAUTY SALES UP 5.6% BOX WHY BUY ORGANIC? CATERING SCHEME & RESTAURANT & HOME SALES UP DELIVERY SALES UP TASTE 1.6% ‘GREEN’ 35% 4.4% 44% HEALTH 55% O R G A N I C M A R K E T REPOR T 2 0 13 5 The organic consumer Four out of five households buy organic products (80.3%). More than half of shoppers (55%) say Organic sales they believe it is important to do so, while only by social 6% think shopping organic is ‘not at all important’. grouping A B 2012 38.2% HEALTHIER, GREENER, TASTIER C2 D E Health, caring for nature/the environment and taste 29.8% are the three most significant motivations for buying organic products. More than half of organic shoppers cite healthy eating (55%) and avoiding chemical C1 residues (53%) as reasons to purchase. Nearly half 32% are motivated by care for the environment and nature (44%), while around a third mention the taste of organic food (35%) and animal welfare Source: Kantar Worldpanel (31%). Taste and environmental factors appear to be less influential than they were two years ago, but health motivations have remained constant. Spending frequency of organic buyers 2012 YOUNGER SHOPPERS LEAD THE WAY Homes The youngest organic shoppers (under-28s) are buying Spend spending more on organic products than they did a year ago. Retired people and ‘empty nesters’ still account for almost half of all UK spending on organic products (48.6%) but the ‘Jamie Generation’ of ethically aware under-35s (16% of sales) significantly increased their average spending in 2012. Leading London retailer Planet Organic says students are an increasingly important part of its customer base, accounting for 10% of all purchases in its five stores. Student purchases increased by 15% in 2012, well above the 5% increase in transactions for the stores as a whole. REAL FOOD, REAL QUALITY Organic consumers are much more interested in food quality, provenance and buying local than the average shopper, and more than twice as likely to also buy Fairtrade products. In-depth research suggests that organic consumer motivations can be 52 weeks w/e 23 December 2012. Source: Kantar Worldpanel grouped together into four broad and sometimes 6 SOIL ASSOCIATION Middle-income Ethically aware Britain’s share under-35s of organic increased their spending has average spend decreased overlapping areas of motivation: living healthily, being a global citizen (or ‘doing the right thing’ Top reasons for buying organic from an ethical perspective), preferring ‘real food’ main reason all reasons (predominantly meaning natural and unprocessed) Healthier for me and my family and seeking out quality (some choose organic 25% 55% options for treats or ‘special occasion’ cooking). Fewer chemicals 17% 53% THE COMMITTED CORE Natural and unprocessed More than three-quarters of households buy organic 12% 52% products but sales are dominated by a small core Better for nature/the environment of committed shoppers. A third of organic shoppers 6% 44% (33%) account for well over three-quarters of Safer to eat spending (85%), while just 6% of shoppers are 7% 39% responsible for half of all sales (51%). The most Organic food tastes better committed buyers are aged 28-44: this is the age 11% 35% Organic farming is kinder to animals bracket where organic products attract the highest 10% 31% spend compared to the national average for all More ethical age groups. 3% 29% No GM ingredients THE SQUEEZED MIDDLE 4% 28% Middle-income Britain’s share of organic spending October 2012. Source: Leapfrog Research/Organic UK has decreased in the past year. The proportion of spending attributed to middle-income C1 shoppers, which includes professionals in administrative and clerical roles rather than management positions, Share of organic sales within Great Britain has decreased from 34% to 32%. The implication is that this is the group which is tightening its belt most in the face of austerity cuts and tax increases. Scotland Lancashire Yorkshire North east 6.9% 6.7% 5.8% 2.7% REGIONAL HOTSPOTS Organic products are most popular in London, 12.9% the south east and the east of England. These are the regions where shoppers spend above the national Wales Midlands East England average on organic food and drink. London alone 8.6% 8.1% accounts for nearly a third of organic sales nationally (32%), with significant spending online. South west London 3% 32.2% 13.1% Source: Kantar Worldpanel South 6 SOIL ASSOCIATION O R G A N I C M A R K E T REPOR T 2 0 13 7 The UK organic market The organic market is subdued on the high street but booming online and in large specialist retailers. UK sales of organic products 1995–2012 Organic shoppers are increasingly choosing the £2,000m convenience and variety offered by home delivery and specialist shops over the inconvenience and £1,750m frustration of finding more limited ranges and £1,500m stock at many supermarkets. £1,250m The three leading organic home-delivery specialists £1,000m (Ocado, Abel & Cole and Riverford) increased their £750m combined turnover by 10.3% in 2012, while the seven leading multiple retailers saw their organic £500m sales fall by 3.8%. The organic market as a whole £250m contracted by 1.5% to £1.64 billion. 1995 2000 2005 2010 Online purchases now represent 10.1% of spending through the major retailers on organic Source: Soil Association, Organic Market Report products, compared to just 5.7% of all food and drink spending. The online boom means that shoppers now spend £4.1 million on organic Share of the UK organic market 2011–2012 products online every week.